Asset Management

Joseph T. Keating | CenterState Bank, Wealth Management

Joseph T. Keating is Chief Investment Officer, Executive Vice President, and Head of Wealth Management for CenterState Bank. Mr. Keating has served in the Chief Investment Officer role for the past 27 years, 14 of which were with Old Kent Financial in Grand Rapids, Michigan. Prior to joining CenterState Bank, he spent five years as Executive Vice President and Chief Investment Officer for RBC Private Asset Management. Keating received his B.A. degree in economics with highest honors from DePaul University and his M.S. degree in economics from the University of Illinois at Champaign-Urbana. He served for three years on the Economic Advisory Committee of the American Bankers Association and has been an instructor at the University of Illinois and at the Keller Graduate School of Management in Chicago. Keating is frequently quoted in The Wall Street Journal, Reuters, Associated Press and local newspapers across the nation. He has been interviewed on CNBC’s “Closing Bell”, Bloomberg News, FOX Business News “After The Bell” and local TV and radio outlets. Since 1987, he has published commentary assessing economic and financial market trends in a monthly Investment Strategy Statement.

Asset Management Programs

Energy Infrastructure

Investment Philosophy and Process

The ENERGY INFRASTRUCTURE PORTFOLIO concentrates on fundamentally sound corporations, master limited partnerships (MLPs), and energy royalty trusts involved in the distribution and production of energy as well as electric utility services in North America.

NBCS seeks to invest in entities exhibiting an increasing stream of tax-advantaged income including dividends and cash distributions. Energy demand has shown robust long-term strength both in the Unites States and globally. High barriers to entry mean that existing entities will be primary beneficiaries of continued domestic and international demand growth.

MLPs are considered to be pass-through entities, eliminating the double taxation that exists in a traditional corporate structure. Couple this with the fact that MLPs pay out 70% or more of their cash flows to investors, you can ensure significantly higher that average yields.

The process begins by focusing on companies with a market capitalization greater than $500 million. NBCS then filters and eliminates the lower quality investments based on financial risk, earning and cash flow predictability, growth stability, and price level risk.

Next, we rank the remaining companies by risk-adjusted fundamentals based on forecast earnings & DCF growth, yield, and projected price ratios. NBCS also captures investors sentiment by assessing past price behavior in terms of price changes, trends, momentum, and volatility. We use this to build a portfolio of 30-40 equally weighted investments which provide ample diversification while allowing rebalancing to buy low and sell high – A position is sold when its price is substantially higher than its fundamental value and investor sentiment points to overvaluation.

Equity Income

Investment Philosophy and Process

The EQUITY INCOME INVESTMENT PHILOSOPHY concentrates on companies with consistent growth in earnings and cash flow, and a history of increasing dividend payments.

NBCS takes an active long-term approach to investing, selecting those companies that emphasize quality and have both a growing and secure income stream. Dividend payments can reduce stock volatility by providing a significant degree of price support. Tax law changes within the past five years have removed the disincentive for investors to receive dividends, greatly increasing the number and quality of corporate dividends.

NBCS strives to capitalize on the growing number of dividend paying companies by managing portfolios characterized by higher log-term results, lower volatility, and financial stability generally associated with dividend paying stocks. This strategy is suitable for investors in or nearing retirement looking for a tax-advantage strategy or a suitable alternative to Fixed Income. We look for a new generation of growth stocks characterized by growth in dividend payments with capital appreciation naturally following along.

The process begins by focusing on large cap (>$2 billion) companies. NBCS then filters and eliminates the lower quality investments based on financial risk, earnings and cash flow predictability, growth stability, and price level risk. Next NBCS ranks the remaining companies by risk-adjusted fundamentals based on a forecast growth rate in earnings, dividends, and projected price ratios. NBCS also captures investor sentiment by assessing past price behavior in terms of price changes, trends, momentum, and volatility. We use this to build a portfolio of 30-40 equally weighted investments which provide ample diversification while allowing rebalancing to buy low and sell high. A position is sold when its price is substantially higher than its fundamental value and investor sentiment points to overvaluation.

Fixed Income

Investment Philosophy and Process

The FIXED INCOME INVESTMENT PHILOSOPHY applies current economic analysis with an historical perspective.

The NBCS Fixed Income Portfolio seeks to generate high levels of risk-adjusted income and competitive total returns through a value oriented strategy process. The use of ETFs, if deemed appropriate, can be used as a substitute for individual issues.

NBCS employs a four step investment process for building a portfolio:

Portfolio Duration – duration of the positions in underlying portfolios are maintained within 25% of the benchmark

Sector Asset Allocation – securities are carefully chosen to include an appropriate mix of treasury, government agency, corporate, and mortgage securities

Yield Curve Positioning – maturities are chosen based on the anticipated shape of the yield curve

Security Selection – relative value at the individual security level is maintained by focusing on industry weightings, liquidity, relative credit spreads, and financial strength of the issuer. Investments are purchased with the intent of being held to maturity, with the realization that portfolio changes may be appropriate to take advantage of changing business and market conditions. NBCS will only purchase securities rates “A” or better by Moody’s or Standard and Poor’s.

High Dividend Yield

Investment Philosophy and Process

The HIGH DIVIDEND YIELD INVESTMENT PHILOSOPHY concentrates on companies with high dividend payouts and the ability to maintain and grow those dividends.

NBCS takes an active long-term approach to investing, selecting those companies that emphasize quality and have both a growing and secure income stream. Dividend payments can reduce stock volatility by providing a significant degree of price support. Tax law changes with the past five years have removed the disincentive for investors to receive dividends, greatly increasing the number and quality of corporate dividends.

NBCS strives to capitalize on the growing number of dividend paying companies by managing portfolios characterized by higher long-term results, lower volatility, and financial stability generally associated with dividend paying stocks. This strategy is suitable for investors in or nearing retirement looking for a tax-advantage strategy or a suitable alternative to Fixed Income. The High Dividend Yield Strategy focuses on current income, while naturally sacrificing some expected dividend growth.

We look for a new generation of growth stocks characterized by growth in dividend payments with capital appreciation naturally following along. The process begins by focusing on large cap (>$2 billion) companies. NBCS then filters and eliminates the lower quality investments based on financial risk, earnings and cash flow predictability, growth stability, and price level risk.

Next, NBCS ranks the remaining companies by risk-adjusted fundamentals based on a forecast growth rate in earnings, dividends and projected price ratios. NBCS also captures investor sentiment by assessing past price behavior in terms of price changes, trends, momentum, and volatility. We use this to build a portfolio of 30-40 equally weighted investments which provide ample diversification while allowing rebalancing to buy low and sell high. A position is sold when its price is substantially higher than its fundamental value and investor sentiment to overvaluation.

Investment advisory services are offered though NBC Securities, Inc., an independent registered broker/dealer and registered investment advisor. Member FINRA and SIPC. CenterState Bank is not a registered investment advisor and is not affiliated with NBC Securities, Inc. Investment products are not FDIC insured, not guaranteed by any bank, and may lose value.

Our history of quality service and community focus started in the early 1990’s when a group of individuals came together around the belief that thinking locally would translate into a better bank. Through their vision, CenterState was born.
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